2006/07 Season End Results

The Hong Kong Jockey Club announced today (1 August) that its total turnover from all operations for the 2006/07 racing season passed HK$100 billion for the first time, with its core business of horse racing showing especially encouraging results.

While warning that the Club still faced tough challenges in winning back business from illegal and offshore operators, as well as growing competition from other forms of entertainment, Chief Executive Officer Winfried Engelbrecht-Bresges, said that the Club's efforts to establish Hong Kong as a world hub of racing and equestrian sports were clearly paying off.

Hong Kong's staging of the Beijing 2008 Olympic equestrian events would further put the city on the world map, he added, as well as leaving a sporting legacy that would benefit the whole community. "As Hong Kong's premier provider of sporting entertainment, we are strongly committed to the development of all types of sport in the community and are currently exploring a number of other long-term sports development projects. For instance, we have already committed funds to setting up a new Football Academy and are exploring ideas for developing football more widely in the community. We are building a new public golf course and establishing a Golf Academy at Kau Sai Chau. In addition, we have also recently committed funds to building a new District Sports Complex in Yuen Long."

Mr Engelbrecht-Bresges also revealed at today's season-end media briefing that The Hong Kong Jockey Club had been officially designated "Outstanding Contributor, Beijing 2008 Olympic Games Equestrian Events" in recognition of its support in creating the equestrian venues and making available its Equine Hospital, Racing Laboratory and other facilities.

Reviewing the 2006/07 racing season, Mr Engelbrecht-Bresges said that Club paid some HK$12.64 billion to the Hong Kong SAR Government in betting duty and profits tax, representing an estimated 8.2% of total tax collected by Inland Revenue Department. In addition to this important contribution to public spending revenue, a further HK$1.05 billion was directly donated to some 107 community and charitable projects large and small by the Hong Kong Jockey Club Charities Trust.

"More and more, the Club is touching the lives of Hong Kong people," he noted. "Independent surveys show that around 30% of Hong Kong people or their families have made use of Club-supported charity and community projects."

The Club's racing activities showed a 6.6% increase in turnover to HK$64.00 billion and a 2.0% increase in attendance to 1.92 million, performances that reversed a trend of 10 years' steady decline since 1997. "The importance of this turnaround cannot be emphasised enough as horse racing lies at the heart of the Club's operations," Mr Engelbrecht-Bresges observed. "A successful horse racing business is essential, as ultimately it has an impact on all our other sports entertainment, membership and charitable activities.

"The increase in attendance shows that our continuing efforts to upgrade the racecourse facilities and provide more on-course programmes are paying off. We want to make a racecourse visit an all-round entertainment experience."

The operations of HKJC Football continued to perform well, although there were no major international tournaments like the World Cup this year to attract business. Turnover showed a slight decrease of 3.5% to HK$30.19 billion but gross margin increased, mainly because results in the major leagues proved less predictable than in previous years. In consequence, the betting duty payable on football operations rose by 6.1% to HK$2.71 billion.

Turnover for the Mark Six lottery grew by HK$296 million to HK$6.59 billion, resulting in Lottery Duty payments of HK$1.65 billion and a HK$988 million contribution to the Lotteries Fund, which supports a variety of organisations in the community under the auspices of Social Welfare Department.

One reason for the improvement in racing turnover, Mr Engelbrecht-Bresges said, was the implementation of the betting duty reforms passed by the Legislative Council last year, which allowed the Club more flexibility to introduce new bet types and lure back turnover from illegal operators. Nevertheless, the Club was still obliged to make up a shortfall of HK$119 million on the HK$8 billion in local horse race betting duty that it guaranteed to Government for the first three years as part of the reform package. "This is a reflection of the difficulties we still face in combating the illegal and offshore operators due to Hong Kong's high betting taxation rates and the regulatory constraints imposed on the Club, such as the strict limits on simulcasts," he said. "Even one extra raceday would have been enough to make up this shortfall."

Mr Engelbrecht-Bresges outlined a series of strategies that the Club planned to implement in the coming years to strengthen its business in the face of growing local and regional competition, revitalise the image of racing, take advantage of new global opportunities to export its successful racing and football products and further strengthen its commitment to the Hong Kong community.

One such initiative was a Racecourse Master Plan which aimed ultimately to achieve 365-day-a-year usage of the Happy Valley and Sha Tin facilities as an entertainment hub and help Hong Kong compete in the sporting and entertainment arenas. "In addition, we have specific plans to revitalise interest in racing. Next season our new Racing Club will also come fully into operation, offering a new, younger echelon of membership a chance to enjoy the excitement of racing and horse ownership. The Racing Club facilities at both racecourses are already built and ready."

Mr Engelbrecht-Bresges believes it is unfortunate that some people still perceive racing as just a gambling activity rather than the exciting and world-class sport that it is. "After all, everything that we do at the Club, as a not-for-profit organisation, is ultimately for the benefit of the community."

In the face of a fast-changing environment, the Club is now reviewing its operational efficiency to maximise its return to the community, and has commenced a strategic planning process, Mr Engelbrecht-Bresges explained. "This will help us realign our operational modes and values, be more customer-focused, break down any barriers that exist and enable us to move forward as One Club, One Team, One Vision."

Appendix

2006/07 racing season figures of the Hong Kong Jockey Club

(A)        Business Figures

1.        Horse Racing ($million)

*Note: The horse racing betting duty includes approximately $39 million duty generated by bets from Macau and a top-up of approximately HK$119 million by the Club to meet the guaranteed payment of HK$8 billion for local bets to the HKSAR Government

2.         Football Betting ($million)

3.         Mark Six ($million)

(B)       Club Contribution

1.         Duties and Profits Tax ($million)

2.         Appropriation to The Hong Kong Jockey Club Charities Trust ($million)

* Note: After the passage of the Betting Duty (Amendment) Ordinance 2006 by the Legislative Council on 12 July 2006, HKJC Horse Race Betting Ltd was formed to become the sole legal operator of horse race betting in Hong Kong, with effect from 1 September 2006.

3.         Donations by The Hong Kong Jockey Club Charities Trust ($million)